CONFIDENTIAL BA/FEB 2023/ECO120/107/113/108

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE PRINCIPLES OF ECONOMICS

COURSE CODE EC0120/107/113/108
EXAMINATION FEBRUARY 2023
TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

This question paper consists of two (2) parts: PART A (4 Questions)

PART B (5 Questions)

2. Answer ALL questions from PART A and four (4) questions from PART B in the Answer
Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet - provided by the Faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 6 printed pages
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PART A

QUESTION 1

The table below shows the relationship between average product of goods X and the
number of workers employed.

No of Land Average Total Product Marginal

Workers Product (AP) (TP) Product (MP)
0 2 - -
1 2 100
2 2 250
3 2 435
4 2 580
5 2 700
6 2 700
7 2 630
8 2 580

a) Complete the table above

(4 marks)

b) Determine the number of workers when the Law of Diminishing Marginal Returns
sets in. Give a reason for your answer.
(2 marks)

c) Identify the most efficient stage and state two (2) factors of production.
(3 marks)

d) Give one (1) example of variable input and one (1) example of fixed input that might
be used by the company.

(2 marks)

e) Sketch Total Product (TP), Marginal Product (MP) and Average Product (AP) in one
diagram and indicate the three (3) stages of production.
(4 marks)

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QUESTION 2

The following table shows the production cost of a firm producing desk chairs.

Quantity Total Total Average Average Average Marginal

Variable Cost Fixed Cost Variable Cost Cost
Cost (RM) (RM) (RM) Cost (RM) (RM) (RM)
0 0 40 - - - -
1 60 60
2 75 15
3 90 15
4 110 20
5 135 25

a) Complete the table above.

(5 marks)

b) If the output of the firm is at 8 units, calculate the Average Fixed Cost (AFC).

(2 marks)
c) Is the firm operating in the short run or long run production? Give a reason for your
answer.
(2 marks)

d) How much is the Total Fixed Cost (TFC) of the firm? Give one (1) example of fixed
cost.
(2 marks)

e) In one diagram, sketch the diagrams for Average Variable Cost (AVC), Average Cost
(AC) and Average Fixed Cost (AFC).
(4 marks)

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QUESTION 3

The following graph shows the equilibrium of a firm in a town.

Cost
4 ft/?C

a) Based on the diagram above, name the curves (i) and (ii). Determine the profit-
maximizing output and price for this firm.
(4 marks)

b) Calculate the amount of profit or loss made by this firm. State the type of profit?

(4 marks)

c) Identify the type of market structure the firm is operating. Justify your answer.

(2 marks)

d) Based on the above situation, should the firm continue or shut down its operation?
Why?
(2 marks)

e) State any two (2) characteristics of this market structure.

(3 marks)

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QUESTION 4

The table below contains items from the national account of a country.

ITEM RM MILLION
Manufacturing 9800
Mining 7800
Construction 4800
Agriculture and fishing 12800
Transportation 5800
Banking and insurance services 17800
Water and gas 14800
Wholesales and retails 10800
Education services 8800
Government services 6800
Factor income received from abroad 5800
Factor income paid to abroad 7800
Subsidies 1880
Tax on expenditure 2280
Capital consumption 1380

Based on the table above, calculate the following:

a) GDP at market price.

(4 marks)

b) GDP at factor cost.

(2 marks)

c) GNP at market price.

(2 marks)

d) National income.
(3 marks)

e) Define personal income. List two (2) uses in national income statistics.

(4 marks)

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PARTB

QUESTION 1

Define economies of scale and diseconomies of scale. Explain three (3) factors causing
economies of scale.

(10 marks)

QUESTION 2

Discuss any four (4) characteristics of a monopolist firm.

(10 marks)
QUESTION 3

Define macroeconomics. Explain four (4) macroeconomic objectives from a conventional

perspective.
(10 marks)

QUESTION 4

Explain any four (4) problems encountered in calculating national income.

(10 marks)

QUESTION 5

Define protectionism. Explain four (4) tools of protectionism.

(10 marks)

END OF QUESTION PAPER

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